Answer Happy

$ $ Initial investment Year 1 nominal revenue Year 1 nominal expense Revenue & Expense growth rate Nominal salvage value Net working capital Tax rate 550,000 300,000 125,000 4% 60,000 15,000 21% $ $ Output area: Salvage value Market price Tax on sale Aftertax salvage value Year Year 2 Year 3 Year 4 Year 5 Sales Expenses Depreciation EBT Tax Net income OCF Year 1 $ 300,000 125,000 110,000 $ 65,000 13,650 $ 51,350 $ 161,350 $ Capital spending Net working capital Total nominal cash flow (550,000) (15,000) (565,000) $ 161,350 $
Part b) Cost of equity based on CAPM Risk-free rate Market risk premium Beta Cost of equity 42 6% 1.19 You should find Apple's beta from Yahoo Finance. risk-free rate + beta' market risk premium Part o) Cost of debt basedon bond yields https://finra-markets.morningstar.com/Bond Center Default.jsp?part=3 List the yields of all bonds with maturity between 1/1/2027 and 12/312027 3.337 Calculate the average yield Cost of debt = the average yield Partd) Capital structure of Apple 2,658,201,600,000 E 124,719,000,000 D Market value of equity E Market value of debt D Weight of equity = E/ (D+E) Weight of debt = DI (D+E) Stock price $162.88 # of shares 16.32B 16,320,000,000 The stock price when you search it online. So students may have different stock prices. Number of shares outstanding should be founded from Yahoo finance. Parte) WACC WACC = Weight of equity' cost of equity + Weight of debt' cost of debt' (1-To) After you calculate the average yield of Apple, you need to add to it. For example, if you calculate an average yield of 3, then it should be 37, if you just use 3 directly, then it's 300%, which is like your interest rate is 300%. Partf) NPV of the project Use WACC as the discount rate, and use the NPVO) fuction to calculate the NPV. Enpvlw acc.year 1 year 2, ....) +D35